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If you're in the market for a home this season, and your real estate agent calls or e-mails saying "now's the time to buy," reply that you'll get back to her in a few months or so. That's how long it'll probably take before we can determine if the U.S. housing sector will remain in a sluggish, uneven recovery or whether something worse is in store.

Here's an evaluation of the latest housing reports, from the most sobering to most encouraging.

The Case-Shiller Chiller

The most distressing recent report has to be the S&P/Case Shiller Home Price Survey, whose 20-city index declined a seasonally adjusted 0.4% in December from November, and 2.4% on a year-over-year basis.

Home prices as measured by Case-Shiller have now declined for five straight months -- erasing almost all of their gains since the recession ended in June 2009.

The brightest of the limited hopeful spots in the latest report was Washington, D.C., where prices rose 1.1% in December from November, on a seasonally adjusted basis. Other December gainers included Dallas, up 0.8%; Boston, 0.6%; Cleveland, 0.2%; and Denver, 0.2%. Prices in Charlotte and San Diego were unchanged.

The other -- highly qualified -- silver lining in the Case-Shiller report is that the latest survey available is for December, which trails the current market by two months. Given that housing activity historically increases in the spring and summer, it's conceivable the price dip could have ended in the two months since.

New-Home Sales Flounder

Unfortunately, two housing reports based on more recent data -- the new-home sales and existing-home sales surveys -- don't do much to clarify the sector's condition: They send either conflicting or complex signals about the real estate's direction.

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New-home sales plummeted 12.6% in January to a worse-than-expected, seasonally adjusted 284,000-unit rate, the Commerce Department reported, and December's new-home sales total was also revised down by 4,000 to a 325,000-unit rate. In January, sales fell in every region: in the Northeast by 19%; Midwest, 25.5%; South, 17.8%; and the South, 15.4%.

Equaling distressing, new-home inventories rose to a 7.9-month supply in January at the current sales pace, up from seven months in December.

Although the median sales price in January rose 5.7% to $230,600 compared to a year ago, even assuming strong GDP growth of 4% in 2011, it will still take at least three quarters -- probably longer -- for new-home sales to return to a more normal annual range of 700,000 to 800,000 units.

With 2010 new-home sale data now in the books, the pattern is obvious: This metric has stagnated near 300,000 since the end of the homebuyer tax credit in September for contracts signed by April 30. It will likely take an increase in organic demand or another tax incentive to get new homes selling in a more sustained way. Absent that demand and given high inventories, new-home prices will struggle at best, and many markets will probably see further declines.

At Least Affordability Is "Extremely Favorable"

However, January's existing-home sales data provides some encouragement for real estate agents and home sellers alike. These sales increased 2.7% to seasonally adjusted 5.36-million-unit annual rate -- a 5.3% gain compared to a year earlier, according to data compiled by the National Association of Realtors.

Equally significant, inventories fell to a 7.6-month supply at the current sales pace, down from an 8.2-month supply in December. However, the median sales price fell 3.7% to $158,800 compared to a year ago, with an increase in distressed sales and cash purchases among the factors that pushed prices lower.

In a statement, NAR Chief Economist Lawrence Yun characterized the sales uptrend as "consistent with improvements in the economy and jobs, which are helping boost consumer confidence."

"The extremely favorable housing affordability conditions are a big factor, but buyers have been constrained by unnecessarily tight credit," Yun said. "As a result, there are abnormally high levels of all-cash purchases, along with rising investor activity."

At the 5.36 million-unit pace, existing-home sales have essentially normalized in the wake of the housing bust. The still-high inventories largely reflect the overbuilding that occurred during the 2002-2006 housing bubble, and the increase in properties listed for sale is due to rising foreclosures.

The Right Move for Homebuyers

In short, the latest housing data reveal a complex, uneven recovery, with areas of sluggishness and even declining prices.

In light of that, the best strategy for potential homebuyers on a risk-return basis appears to be to wait three months or so. As Mick Jagger and The Rolling Stones sang, "Time is on your side, yes it is." Here's why:

Even in the stronger markets, prices probably won't rise substantially in a quarter. And there's a decent chance they may move sideways, or even retreat, given the current high inventories. That's to the potential buyer's benefit, assuming mortgage financing terms remain the same. All of which suggests it's worthwhile to wait three months to see if prices remain firm.

And in the weaker markets, common sense argues that amid declining prices and high inventories, an unusually large increase in demand would have to occur to change the trend and push prices substantially higher in a quarter. For these weaker markets, the probability that waiting will benefit potential buyers is even higher.

Keep Mick in Mind

Of course, anomalies in niche markets -- such as resort areas -- almost always occur, and some trendy areas will recover more quickly. It wouldn't be surprising to see the cosmopolitan markets of San Francisco and Manhattan experience price rises ahead of any broader recovery.

But outliers aside, unless you've spotted your dream house and you simply must have it now, it probably will pay to wait a quarter to confirm that home prices aren't weakening further. Keep humming that Rolling Stones tune, and remember: Time is on your side.

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esskar

Of course there is another wildcard in the above scenario - that of mortgage interest rates. At this time, rates are at historic lows. Does it really matter if the house drops in value five-ten thousand dollars if rates for a thirty year mortgage increases dramatically? In the long run - one may miss the better deal by waiting, because the lower amount for the house may be offset by the higher interest rate. And prices sooner or later will creep back up as supply diminishes and demand grows. No one knows what the future will hold, but one must take mortgage rates into consideration when deciding when the best time is to buy a house.

Anyone who makes difinitive, generalized predictions about the real estate market loses any and all credibility. I was going to leave a winded comment about how wrong this article is but Kluckner and and dallen8574 pretty much summed up my thoughts. The market is very local and right now it could go in either direction depending on how your home's specific neighborhood is behaving.

Taking national statistics and applying them as being "the real estate market" makes no sense at all. Each area is made up of many, many individual markets each with its own set of problems and benefits. As a realtor for over 35 years I can tell you that, even within the most severely damaged areas, there are bright spots that surpass all surrounding areas in demand and price appreciation.

Joe, after reading your bio, i see no reason why you should be writting an article like this. Your specialties have nothing to do with real estate. You don't even mention the possibility of interest rates increasing, therefore costing more to the buyer if the market is at the bottom. I wonder what your thoughts are about the direction of the current jobs market, because that seems to be something you are better educated to speak to, which in the end will dictate where the housing market will go. There were and still are plenty of economists that say the stock market is rising to sharply, but if it isn't look at all the people that were too afraid to get in because of people like you. I'm just saying leave the real estate to real estate ecomonists that actually have experieince to back them up, and can provide a biut more depth to their story, then just doom and gloom.

Hopefully people who want to purchase a home will not take this so called experts advise. If people sit on their hands and buy nothing, we will continue to put our economy in the tank. Every market is different and an article like this giving general information does more harm than good. If we live our lives going around with the attitude of what if this happens or that happens, what kind of life is that? I know, one where a person is too paralzyed to ever make a decision.

Home prices may seem like relative bargains, but how can you commit to a home purchase if you can't even get hired at the local supermarket for minimum wage???People need jobs that are secure and pay a living wage before they can think of buying a house. And yes, prices will continue to fall this year, no matter how rosey your glasses are.